Fraudsters fleece Egypt using foreign wheat

Thu May 31, 2012 5:14pm GMT

By Sarah McFarlane and Maha El Dahan

LONDON/ABU DHABI (Reuters) - Top wheat importer Egypt's decision to increase the price premium paid to its own farmers has given fraudsters a golden opportunity to pass off cheap foreign grain as locally grown and profit at the country's expense.

Traders and a government official admitted that despite efforts to check whether local farmers really grow the grain they sell, the problem of disguising imported wheat to profit from the payments will remain or worsen this year as the rewards grow.

"In reality it happens every year, this year it's happening even more because the spread is bigger (between cheap origins and Egypt's local wheat price)," a trader said.

"It was Ukrainian, some Russian, some Argentine, but mainly Ukrainian this year."

Evidence of the problem comes from the fact that purchases of local grain remain brisk even though a shortage of diesel for farm machinery since the start of the year should, in theory, be holding back local output.

Egypt has bought 1.1 million tonnes of local wheat so far in the 2011/2012 season despite the diesel shortages, the supply ministry said last week.

Local procurement increased in 2011 to 2.6 million tonnes from 2.1 million tonnes a year earlier.

And with Egypt raising the price it pays for local wheat in October to 380 Egyptian pounds per ardeb (140 kg) from 350 pounds during the last season, traders said wheat from several origins may have been imported since to be sold onto the government at a profit of around $100 per tonne.   Continued...

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